Productivity, Trade, and Air Pollution: Evidence from French Manufacturing – PRODPOLU

A large body of research indicates that air pollution affects human health and productivity (see Graff Zivin & Neidell (2013) for review). If these pollution-induced health shocks adversely affect labor productivity, then standard microeconomic theory suggests they should increase costs and prices, and lower gross output, revenues, profits, wages, consumer surplus, and total social welfare, depending on structural elements of supply and demand. While there exists a nascent literature that aims to connect pollution-induced productivity shocks to economic outcomes (see for example Fu et al., 2017 and Dechezlepre?tre et al., 2019), there is still very little work on the effect of these shocks on the operations of firms. To what extent do firms’ costs depend on local air pollution concentrations? Do firms pass the cost of pollution shocks on to consumers and workers? And if so, do these costs cross national boundaries? The goal of PRODPOLU is to link geo-localized data on French manufacturing plants together with detailed information on plant and firm-level outcomes and high spatial resolution pollution data to study for the first time the productivity, price, wage, and output effects of air pollution in a unified empirical framework.